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The key difference between the law of diminishing returns and decreasing returns to scale is that the. former is in the short run, where at least one factor of production is ï¬xed, whilst the latter is in the long. run, where all factors of production/ inputs can be varied. As seen on the diagram below, long run.
Diseconomies of Scale. The decrease of efficiency in the making of a product by producing more of it. That is, diseconomies of scale occur when a company increases its output for a product such that it increases the cost per unit of the product. For example, assume that labor costs at a factory are constant as long as the factory produces between 100,000 and 500,000 units per month.